siltronic ag investor presentation

© Siltronic AG

Siltronic AG

Investor Presentation

May / June, 2019

© Siltronic AG

COMPANY OVERVIEW

Siltronic AG – Investor Presentation May / June, 20193 of 31

Increasing demand for electronic devices and new applications

drive semiconductor growth, which in turn fuels silicon demand.

Electronics Value Chain 2018

Electronics

USD 1,622 bn

Semiconductors

USD 456 bn

Semiconductor silicon wafers

USD 11.4 bn

Silicon for electronic applications

USD 1.2 bn

Source: Electronics (IC Insights), Semiconductors (WSTS, only silicon-based), Silicon wafers (SEMI SMG), Electronic applications (estimate)


Production process - ingot growing


Production process - wafering


Ever new applications for electronic devices and the

infrastructure to support them continue to drive silicon demand

Electronic equipment contains multiple devices built on tailormade Si substrates

Current growth drivers include:

1972 Today

Data explosion: connected devices, data transport and storage, big data, logic/AI

Power: renewable energy, smart grid, battery chargers

Automotive: ADAS, infotainment, electro mobility


0

1

2

3

4

5

6

7

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

300 mm 200 mm SD (pol/epi)

Siltronic is focused on growing 300 mm and attractive 200 mm

business.

Source: SEMI up to Mar 2019

Stable &

attractive

Mid-term

decline

Strong

demand

&

growth

Development of Total Wafer Demand per Diameter, in mn 300 mm equivalents per month


11%

15%

30%

27%

17%

SK Siltron Siltronic Shin Etsu Sumco GlobalWafers

Siltronic is a strong wafer supplier with leading-edge technology

Sources: reported company revenues Q1-Q3 2018, converted to USD million

Top 5 wafer producers serve more than 90% of market across all diameters


Siltronic is a supplier to all top 20 Silicon wafer consumers

Customer base well diversified across all major semiconductor

silicon wafer consumers.

Source: Company Information, Siltronic

Siltronic well positioned at all

major Silicon consumers

Top 10 customers represent ~75%

of 2018 revenues

http://www.geek.com/apple/apple-to-ditch-samsung-for-its-apple-a6-next-generation-socs-1396153/attachment/apple-a6/

http://www.google.co.uk/url?url=http://commons.wikimedia.org/wiki/File:Intel-logo.svg&rct=j&frm=1&q=&esrc=s&sa=U&ei=Rr-JVMeTAYHpUuqzg_gC&ved=0CBYQ9QEwAA&usg=AFQjCNGUKz8LOfSVN88D6k-LS8vun4YiuA


International manufacturing network supports

market leadership and business focus

Portland

United States

300 mm

300 mm

200 mm

SD*

200 mm300 mm

Freiberg

Burghausen

SSW SSP

CP*

Germany

Singapore

CP*

CP*

*CP = Crystal Pulling | *SD = 150 mm and smaller

► Central R&D hub in Burghausen

► High volume facilities for 300 mm

in Germany and Singapore

► Among world’s newest & largest

fabs in Singapore


Ingot

Continuous improvement of key ingot and wafer properties to

meet customers‘ requirements

Wafer

oxygen contenthomogeneity

flatness

surface cleanliness

edge flatness

uniformity

resistivity

shape

mechanical stability

purity

doping level


Financials improved strongly over the last years

.

1 In 2018, Siltronic started reporting the key figure „net cash flow“ instead of „free cash flow“. Net cash flow represents free cash flow without the time shifts created

by inflow and return of customer prepayments which, due to the size, impairs the meaningfulness of free cash flow.

Adjusted financial figures (EUR

million)2015 2016 2017 2018

Sales 931.3 933.4 1,177.3 1,457.7

EBIT 2.7 27.0 235.7 497.7

EBIT margin in % 0.3 2.9 20.0 34.2

EBITDA 124.0 146.0 353.1 589.3

EBITDA margin in % 13.3 15.6 30.0 40.5

Earnings per share (0.50) 0.40 6.18 12.44

CapEx 75.0 88.8 123.2 256.9

Free cash flow 1 37.4 19.0 169.6 -

Net cash flow 1 - 39.6 124.8 240.4


Siltronic Outlook 2019 (as of April 10, 2019)

between 33% and 37% (prior: slightly below prior year)EBITDA margin

clearly positive, approx. EUR 150m (prior: EUR 100m) below 2018, with a

subsequent significant increase again in 2020 Net cash flow

depending on timing of market recovery and on FX effects around 5% to 10% below 2018

(prior: in the region of the previous year)Sales

negative effect due to tariff increases and EUR 20m higher electricity costs in GermanyCost position

around EUR 110mDepreciation

between 15% and 20%Tax rate

about EUR 350m in capacity, automation and capabilities; significantly lower in 2020Capex

significantly (prior: slightly) below 2018Earnings per share

significantly below 2018 (prior: a good 10% below 2018)EBIT

better than the previous yearFinancial result

negligible vs. 2018 assuming EUR/USD rate of 1.15 and EUR/JPY rate of 130FX effects


300mm demand impacted by smartphone and server softness;

Overall 200mm will depend on industry and automotive.

Volume

Si consumption share per selected end market

in % of total surface in 2018

Smart-

phones

PCs

Servers

Industry

Cars

Content

Si consumption demand driversInventory

effectsTotal effect

Source: Data based on IHS Markit, Technology Group, Semiconductor Silicon Demand Forecast Tool, Q1 2019. Results are not an endorsement of Siltronic. Any reliance on these results is at the third party’s

own risk. Visit technology.ihs.com for more details. Other source: Siltronic Marketing

6%

18% 20%5%

25%27%

14%

1%

21%

5%4%

34%

19%

4%

300 mm 200 mm SD

Automotive IndustrialSSD PC/ServersSmartphone


Siltronic strategy - capitalize on market opportunities while focusing

on 300 mm & technological leadership

Grow

with the market

Improve

financial performance

& cash flow

Execute

cost reduction

roadmaps &

debottlenecking

concepts

Ensure

technology &

quality leadership

Strategic Focus

We continuously increase the value for our stakeholders by providing best-in-class wafers

at competitive costs.

Optimize returns,

stay ahead in technology and

grow with the market

© Siltronic AG

APPENDIX


Slow start into 2019 due to weaker wafer area demand

327.4 361.3 379.8 388.1354.4

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019

202.5 209.3 204.8 208.1 209.9

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019

124.9 152.0 175.0 180.0 144.5

38.142.1

46.1 46.440.8

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019

Sales in Q1 down vs. Q4 2018 as expected

due to lower wafer area sold

COGS per cm2 only slightly up despite

significantly higher energy costs

Gross margin up y-o-y but down q-o-q

Sales, in EUR million Cost of Sales, in EUR million

Gross profit, in EUR million / Gross margin, in % Comments


Profitability affected by higher costs

96.6 124.1 138.0 138.9103.4

29.534.4 36.3 35.8

29.2

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019

122.3 146.0 160.2 160.8 127.2

37.4 40.4 42.2 41.435.9

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019

Depreciation in FY 2019 up due to new crystal

pulling hall and new equipment

EBITDA margin impacted by COLA and higher

energy costs

EBIT margin FY 2019 additionally impacted by

higher depreciation

EBITDA, in EUR million / EBITDA margin, in %

EBIT, in EUR million / EBIT margin, in % Comments

Depreciation, in EUR million

25.7 21.9 22.2 21.9 23.8

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019


Shareholders to participate in continued value creation

78.6 91.3 105.8 97.5 80.3

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019

2.62 3.04 3.53 3.25 2.68

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019

075

150

FY 2017 FY 2018 FY 2019e

Net profit EUR 80.3m in Q1

General dividend policy: pay-out ratio of approx.

40% of net income attributable to shareholders

Proposal to AGM on May 7, 2019: increased

dividend of EUR 5.00 per share

(prior year: EUR 2.50)

Net profit attributable to shareholders,

in EUR million

EPS, in EUR

Dividend payment, in EUR million Comments


381 389 374 362 422

Q12018

Q22018

Q32018

Q42019

Q12019

Strong equity ratio and solid net financial assets

707 720 842 916 968

49.9

46.648.4

50.448.4

Mar18

Jun18

Sep18

Dec18

Mar19

Equity, in EUR million

Equity ratio, in %

Net financial assets,

in EUR millionPension provision,

in EUR million

491 603 714 691 762

Mar18

Jun18

Sep18

Dec18

Mar19

Interest rates IFRS

USA

Germany 2.02%

3.81%

2.00%

3.99%

2.04%

4.02%

1.98%

4.08%

1.66%

3.69%


CF Capex, in EUR million

-25.0 -48.3 -53.7-108.5

-67.1

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019

Strong net cash flow despite high payments for capex

174.6

231.2

165.4

80.7131.1

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019

37.2

115.7

18.7 4.4

-16.8

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019

112.467.1 93.0

-32.2

80.8

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019

Operating cash flow (OCF), in EUR million Customer prepayments net (PP), in EUR million

Net cash flow (NCF), in EUR million

NCF= OCF-PP-CF Capex


Highlights of the history of Siltronic AG

Siltronic – More than 50 years of experience in the semiconductor

industry

1962

Development of

the first silicon

wafers

1968

Wacker-Chemitronic

Gesellschaft für

Elektronik-Grundstoffe

mbH (“Wacker-

Chemitronic”) founded

1978

Foundation of

Wacker Siltronic

Corporation in

Portland, Oregon

(USA)

1984

First 200 mm wafers

at Wacker-

Chemitronic

1995

Acquisition of Freiberger

Elektronikwerkstoffe

Produktions- und

Vertriebsgesellschaft

mbH, Freiberg

1997

Wacker Siltronic

Singapore Pte. Ltd.

founded

2018

Ground-breaking

for the crystal

pulling hall of the

latest generation in

Singapore

2017

Wacker executes a

second placement

and holds a

minority of 30.8%

2015

Siltronic

executes

successful

IPO

1990

First research

and development

projects for

300mm wafers

1999

Fab in Singapore

kicks off production

2004

300 mm silicon

wafer fab launches

production in

Freiberg

2004

Company

name changed

to Siltronic AG

2006

Joint venture Siltronic

Samsung Wafer Pte.

Ltd. (now: Siltronic

Silicon Wafer Pte. Ltd.)

with Samsung.

2014

Take-over of

majority stake

(78%) in Siltronic

Silicon Wafer Pte.

Ltd. in Singapore


2009 2015

6,953

3,914

2002 2018

Outstanding cost reduction and efficiency improvement track

record

1 Delivered wafer / paid hours (2009 = 100)

2010 2015

Variable costs of 300 mm wafer

(Germany),

in EUR / Wafer

Successful restructuring

including Germany

from 7 to 4 Sites

300 mm Productivity1 (Germany)

More than 40% reduction of

the variable unit costs in

300 mm wafer

Almost 100% increase of

employee productivity in 300

mm wafer

Number of employees

>40%

200

100

>100%

2018 2018 2018


Sustainability at Siltronic AG

Claim: We understand sustainability as responsible action for society and

want to generate competitive advantages through sustainable action.

Strategy: We plan resource-saving right from the start, based on product and

production safety as well as health and environmental protection.

Voluntary commitments: We follow the principles of the Sustainable

Development Goals, the United Nations Global Compact, and the Responsible

Care and Responsible Business Alliance initiative.

Goal: We want to reconcile the effects of our business activities with the

expectations and needs of society.

Clear commitment to sustainability

Investor-Rating: Since 2018, we have been analyzed by ISS-oekom, one of the

world's leading rating agencies for sustainable investments, and assessed with

regard to the ESG criteria (Environment, Social, Governance). Right from the start,

we were awarded ‘Prime’ status for our sustainability activities.


Conservation of resources & recycling

Compliance & human rights

Social commitment

… society

Occupational safety & health protection

Personnel development & satisfaction

Diversity & equality

Long-term value enhancement

Attractive returns

On-going cost reduction

Quality & innovation

Product safety

Process reliability

Creating value for key stakeholders

… its customers and suppliers … its shareholders

... its employees

Siltronic

offers ...


100 %

57.8 %

30.8 %

42.2 %

69.2 %

pre-IPO post IPO since March 15,2018

Wacker Chemie AG Free Float

Shareholder structure

26%

26%19%

29%

USA UK Germany Other

Identified free float by region(State: December 31, 2018)

BlackRock, Inc. 4.59 %

State of Norway 4.93 %

Morgan Stanley 3.20 %

J.P.Morgan 3.27 %

Significant notifications of voting rights(State: March 31, 2019)


Zeta

byte

160

120

80

40

02010 2013 2016 2019 2022 2025

Zeta

byte

Zeta

-byte

7 billion networked devices will collect around 60

ZB of data in 2021

Cloud

Data storage, networking and digitalization

Infotainment

Engine

Security

Comfort

Networking

ChassisElectronic

systems

Second camera

Flash NAND

(256 GB)

Front camera

Broadband

processor

Source: CISCO VNI Forecast, IDC Data Age 2025; Siltronic estimates


Industrial semiconductor segment comprises a wide range of

applications

Source: appliedmaterials.com

Other IndustrialPower & Energy

Building & HomeMedical Manufacturing

manufacturing equipment

robotics

process control equipment

measurement instruments

motor controls

built in climate control

lighting

safety & security equipment

diagnostics and control

imaging equipment

laboratory test

patient monitoring

equipment for energy

production and distribution

industrial power supplies

energy meters

aircraft systems

radar, sonar, avionics

missile guidance

military grade computers

power tools

ATMs

ships, golf cars, electric bikes

and trains

Aerospace & Military


Contact and Additional Information

Issuer and Contact

Siltronic AG

Hanns-Seidel-Platz 4

D-81737 München

Investor Relations:

Petra Mueller

Email: [email protected]

Tel. +49 89 8564-3133

Additional Information

ISIN: DE000WAF3001

WKN: WAF300

Deutsche Börse: WAF

Listing: Frankfurt Stock Exchange

Prime Standard

Financial Calendar

Half Year Report July 25, 2019

Q3 Quarterly Statement October 24, 2019


The information contained in this presentation is for background purposes only and is subject to

amendment, revision and updating. Certain statements contained in this presentation may be

statements of future expectations, future financial performance and other forward-looking statements

that are based on management's current views and assumptions and involve known and unknown risks

and uncertainties. In addition to statements which are forward-looking by reason of context, including

without limitation, statements referring to risk limitations, operational profitability, financial strength,

performance targets, profitable growth opportunities and risk adequate pricing, words such as "may”,

“will”, “should”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “continue”,

“projects” or “seeks”, “potential”, “future”, or “further” and similar expressions may identify forward-

looking statements. By their nature, forward-looking statements involve a number of risks, uncertainties

and assumptions which could cause actual results or events to differ materially from those expressed or

implied by the forward-looking statements. These include, among other factors, changing business or

other market conditions, currency and interest fluctuations, introduction of competitive products, poor

acceptance of new products and services, change of the corporate strategy and the prospects for

growth anticipated by the management. These and other factors could adversely affect the outcome and

financial effects of the plans and events described herein. Statements contained in this presentation

regarding past trends or activities should not be taken as a representation that such trends or activities

will continue in the future. Siltronic AG does not undertake and does not intent to undertake any

obligation to update or revise any statements contained in this presentation, whether as a result of new

information, future events or otherwise. In particular, you should not place any reliance on forward-

looking statements which speak only as of the date of this presentation.

Disclaimer

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